General Accident Insurance Company Of America v. Gonzales

Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. 93 C 185--James T. Moody, Judge.

Before WOOD, JR., COFFEY and RIPPLE, Circuit Judges.

COFFEY, Circuit Judge.

ARGUED SEPTEMBER 28, 1995

DECIDED JUNE 6, 1996

On December 8, 1992 Louis Gonzales was returning home from work with four of his fellow employees when his vehicle was struck by an uninsured drunken driver, causing personal injury to Gonzales as well as his passengers. Gonzales's insurance carrier, General Accident Insurance Company, sought a declaratory judgment under the federal diversity statute, 28 U.S.C. sec. 1331, *fn1 seeking to establish that Gonzales's policy did not provide coverage for the accident. The district court granted summary judgment to the insurance company, reasoning that Gonzales was carrying passengers for a fee which was beyond the coverage of the policy. Gonzales and his four passengers appeal.

I. Background

Gonzales was employed in a windshield wiper assembly factory in Michigan City, Indiana, approximately forty miles from his home in Merrillville, Indiana. In October 1990, he purchased a customized GMC mini van for his own personal use. Sometime thereafter, Gonzales began driving his van to work on a daily basis. About a month after the purchase of the mini van, Gonzales was approached by four of his co-employees who also lived in Merrillville, asking whether they could share the ride to work with Gonzales. Gonzales agreed and arranged to pick up the co-employees each weekday morning at a nearby parking lot, drive them to work, and return them to the same location in the evening. Each rider gave Gonzales $5 for the eighty-mile round-trip. The deposition testimony clearly reflects that the employees considered themselves car pooling.

The record makes clear that Gonzales was contacted by his fellow employees at the factory, and that he at no time either solicited nor advertised for passengers. The riders stated on deposition that not only was the arrangement convenient for them, but it was also a better deal for them than driving individually or taking the bus. However, on days that Gonzales did not go to work each one individually drove their own cars or took the bus. Gonzales's vehicle was insured under a personal automobile policy issued by General Accident. The policy provided the following exclusion:

A. We do not provide Liability coverage for any person:

. . . .

5. For that person's liability arising out of the ownership or operation of a vehicle while it is being used to carry persons or property for a fee. This exclusion (A.5.) does not apply to a share-the-expense car pool.

The policy contained an identical exclusion in its coverage for uninsured motorists. However, the policy is silent on the issue of "share-the-expense car pool" and did not define the term "share-the-expense car pool."

Gonzales calculated that his weekly gas was "at least forty dollars," but stated that he never made any exact calculations as to his other expenses such as wear and tear and depreciation on the vehicle including tires, insurance, maintenance, oil and gas etc.

After the accident, it became clear that the driver of the other vehicle involved in the accident (who pled guilty to operating a motor vehicle while intoxicated causing serious bodily injury, an Indiana Class D felony) was uninsured and that Gonzales and his passengers had potential insurance claims against his insurance carrier General Accident. The insurance company in turn filed for declaratory judgment, claiming that coverage was excluded because Gonzales was transporting persons for a fee and that his arrangement did not fit within the parameters of a car pool arrangement as set forth in the policy. The district court agreed and granted summary judgment in favor of General Accident.

II. Analysis

We review summary judgment de novo. Nucor v. Aceros Y Maquilas De Occidente, 28 F.3d 572, 583 (7th Cir. 1994). In this case, the insurance policy at issue excluded coverage if the insured carried persons for a fee; however, the policy provides an exception for a "share-the-expense car pool."

The two questions we must address are (1) whether Gonzales carried passengers for a fee, and if so, (2) whether Gonzales's conduct fell within the policy ...

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